Forbes: Reinstituting RAC Medicare Audits Would Add $40 Billion Per Year To The Federal Budget

Reinstituting RAC Medicare Audits Would Add $40 Billion Per Year To The Federal Budget

Guest commentary curated by Forbes Opinion. Avik Roy, Opinion Editor.

Opinions expressed by Forbes Contributors are their own.

GUEST POST WRITTEN BY

Kristin Walter

Ms. Walter is spokesperson for the Council for Medicare Integrity.

As the Trump Administration and the 115th Congress dive into reform of the Affordable Care Act (ACA) and take steps to reduce the federal budget, discussions about improper payments within the Medicare Fee-For-Service (FFS) program need to take center stage.

Medicare wastes more taxpayer dollars than any other program government-wide, with more than $40 billion lost annually to provider misbilling. In fact, over the past four years more than $166 billion have drained from the Medicare Trust Funds, money that could be used to extend the life of the program. If recovered, these funds could go a long way toward strengthening our nation’s healthcare safety net or even fund other much-needed programs.

It’s outrageous that the federal government allows such rampant wasteful spending to persist while it is consistently in need of funding to strengthen our infrastructure, support new medical research and improve healthcare for veterans.

It’s even more outrageous when you consider the very uncertain financial future of the Medicare program itself. With the number of Medicare beneficiaries growing by leaps and bounds each year, healthcare costs increasing and an improper payment rate above the legally allowed threshold of 10% for the past three years, in just 11 short years, Medicare will be unable to provide healthcare coverage at current levels for America’s seniors.

According to a new Kaiser Family Foundation issue brief, Medicare’s actuaries estimate the program will be able to cover hospital insurance benefits for seniors in full until 2028. After that, Medicare will have to reduce coverage down to 87% of what is covered today, relying solely on dwindling payroll deductions to fund the program.

Additionally, the Kaiser brief shares that benefits for Medicare Part B physician services and Part D prescription drugs are funded separately through a combination of general government revenue and the premiums that beneficiaries pay. However, with large projected spending increases on the horizon, the federal government will need to increase revenue to continue to cover those programs in the future.

The ability to stop hemorrhaging taxpayer dollars from the Medicare FFS program exists, is in place and tested—it’s just barely being used.

After seeing its success in the private sector, Congress mandated the Recovery Audit Contractor (RAC) Program in 2009 to review post-payment Medicare FFS claims, identify improper payments and return misbilled funds back to the program. Since the RAC program began, more than $10 billion has been returned to the Medicare Trust Funds, all while auditing a mere 2% of a provider’s claims.

Recently, the Centers for Medicare and Medicaid Services (CMS) scaled back the RAC program allowing auditors to only review 0.5% of a Medicare provider’s claims—tying the hands of auditors and essentially green-lighting the future loss of tens of billions of dollars from the program annually.

CMS has also had the opportunity to lock in a safety net of pre-payment audits to catch billing mistakes before the claims are paid. In 2012, a RAC Prepayment Review Demonstration Project was approved and implemented to allow for the auditing of a limited number of certain error-prone claim types prior to payment. RAC pre-pay audits were greatly successful, saving Medicare $192 million. Despite this success, the program was paused in 2014 and never restarted.

The negligible use of proven Medicare integrity programs is quite startling when you compare Medicare practices to those of private insurance payers. The private health insurance industry requires that the same providers agree to comply with up to 100% review of claims before paying for services rendered. When you compare reviewing 0.5% of claims for accuracy with reviewing 100% of claims for accuracy, it’s no wonder Medicare is facing insolvency.

It’s very simple—if the new administration wants to tighten federal spending, here is the low-hanging fruit that can put an additional $40 billion back into their hands each year. Get the RACs back to work auditing a higher percentage of Medicare post-payment claims and add an extra level of security to the program by instituting a permanent RAC pre-pay auditing program to prevent our taxpayer dollars from being paid inappropriately in the first place.